If you have a great deal of outstanding debt, there are a number of benefits to getting a debt consolidation loan. Consumers who qualify for debt consolidation loans have the opportunity to begin paying down their debt much sooner than they would without one. Here are some of the benefits of using a debt consolidation loan.
One of the first benefits people experience from using a debt consolidation loan is stress reduction. The most common factor known to create stress is debt. By consolidating your debt into one account you significantly reduce stress in your life because you’ve taken the steps necessary to get your debt under control. There’s a peace of mind that comes with knowing you’re back in control of your spending habits having worked with professionals to create a workable plan for paying down your debt.
Another benefit to using a debt consolidation loan is reducing several payments due every month to one payment. A debt consolidation loan is a loan that’s used to pay off all of your other accounts. Many consumers have multiple credit cards either maxed out or nearly maxed out that charge high interest rates. With a debt consolidation loan you’ll have one payment instead of worrying about multiple payments with varying deadlines. Having only one payment allows you to focus in on paying your debt down sooner. Rather than worrying about which account to pay off first, you only have to put your extra money into one debt account to begin paying off your debt. In many cases your monthly payment is much smaller because a debt consolidation loan gives you a longer time period to pay off the loan.
With a debt consolidation loan those annoying calls from collection agencies stop too. Calls from pestering collection agencies only add to the stress of trying to pay down your debt. When you have a lot of debt it’s easy to get behind on payments with creditors ultimately turning your account over to collection agencies who often call you several times a week or daily. By taking out a debt consolidation loan your outstanding balances with collection agencies are paid off so collection calls stop.
Consumers who qualify for a debt consolidation loan are also able to save a significant amount of money each year on interest. Most folks who are in over their heads with debt often have several credit cards that are maxed out. And credit card companies take full advantage of such a high balance by charging astronomical fees and interest rates compared to other interest rates in the market. With a debt consolidation loan consumers are able to secure a lower interest rate than the one charged by the credit card company, saving them money on their monthly payment and long term over the life of their loan.
Improve Your Credit Score
A debt consolidation loan also helps improve your credit score. When your debt is out of control and you’re consistently late making payments on your accounts you significantly damage your credit score. By consolidating your debt into one payment and staying on top of this payment you are better equipped to rebuild your credit score.
If you’re ready to take control of your debt, a debt consolidation loan may be for you. Working with a Homestead Financial Mortgage loan officer can help you get the debt consolidation loan process started.